5 Nonprofit Low Points in 2012

By Caroline Preston and Suzanne Perry

Hull House Closure

Hull House, a 123-year-old Chicago charity, closed its doors in January, a sign that the sluggish economic recovery and declining government aid could doom even the nonprofit world’s best-known and most iconic organizations. Founded by Jane Addams (above), who pioneered the settlement movement in America, Hull House’s budget shrank by more than 40 percent over the last decade. By 2012, it owed about $3-million.

Hull House was the highest-profile casualty yet of the nonprofit world’s post-2008 financial reality.

Washington Gridlock

With Washington embroiled in partisan tugs-of-war large and small in 2012, nonprofit leaders often felt discouraged about their efforts to produce change on issues facing society. Congress and the White House were consumed by bitter budget battles and distracted by the fall elections, giving little attention to pressing questions like climate change or immigration.

And with just days until the deadline for automatic spending cuts, negotiations over ways to trim the deficit threaten to both limit the charitable deduction and cut spending on social programs.

John Moore/Getty Images

Fundraising Scandals

Accusations flew that charities were misleading donors by disguising their true fundraising costs. CNN aired exposés of several nonprofits that are deeply in debt to Quadriga Art, a big direct-marketing firm, and have little money left to spend on direct services—and the Senate Finance Committee (above) stepped in to investigate one of them, the Disabled Veterans National Foundation.

A Bloomberg Markets Magazine report detailed allegedly deceptive appeals conducted by an Ohio telemarketing company, InfoCision Management Corporation, for charities including the American Cancer Society and American Diabetes Association. While admitting no wrongdoing, InfoCision agreed to pay $75,000 under a settlement with Ohio’s attorney general.

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Child Sex Abuse

The year brought depressing examples of sexual predators using charities to find their victims—and more evidence that charities over all need to do a better job of protecting kids.

Jerry Sandusky, former Penn State University assistant football coach, was sentenced to prison for molesting children he had met through the charity he founded, the Second Mile. And the Boy Scouts of America was ordered by an Oregon court to release files showing that scouting officials had failed to report hundreds of allegations of child sexual abuse to police and in some cases allowed suspected abusers to leave the organization quietly.

The Horace Mann School and the Yeshiva University High School for Boys are also investigating allegations of sexual abuse of students.

Talia Frenkel/American Red Cross

Superstorm Sandy

Already stretched nonprofits were whacked with a storm that tore across the Eastern Seaboard, wreaking damage that New York Gov. Andrew Cuomo called “more impactful” than 2005’s Hurricane Katrina. Private donors and government stepped in to help, but the recovery effort in hard-hit New York City, parts of New Jersey, and other regions is expected to take years, diverting at least some philanthropy from other causes.